Residential & Commercial profit margin ranges

[Captain Morgan]

Hi Guys,

I was wondering what an acceptable average profit margin for these market segments are in our industry is?

I know that the costs and expenses for each business are different based on a start up vs. an established business and different parts of the country can garner different amounts per square foot than others...that said, I'm looking for a general range to use as a guide for my business and marketing plan.

I feel I've done a good job of calculating all my expenses for supplies, marketing, education, insurances, repairs replacement equipment costs, salary, misc expenses, etc etc..

I've heard some say profit margins should be a minimum 50-60%. When I shoot for that percentage my prices are astronomical! When I lower it to what are more in line to what current market rates my margin is like 12% and I don't see myself as being to stay in business very long.

Am I missing something? Is it normal in the first few years to be THAT upside down? I need to be profitable from the start and not be working for free hoping in 4-5 years "word of mouth" and referrals will catch hold and take me to the promised land. It didn't work before so I want to make sure this time I can stay in business and support me and my son. My other son will live with my ex wife.

Thank you in advance for your thoughts, comments and advice.
Bill

 

[Cleanworks]

When you say your prices are astronomical, do you mean compared to others advertised prices? You always have to realize the an advertised price is not the same as the final price. It's great that you are calculating your costs, that's where a lot of carpet cleaners fail. You need to base your price on the type of service you perform. For example where I am, an average price for a prespray and rinse type of job with a truck mount averages $.25 per sqft. Add in prevacuuming, scrubbing with a 175 or brush pro and you are easily up to .35. Sell some type of protector on top of that and you are at .50. These are not high prices by any means. One of my competitors is at .56 per sqft. before any protection. You also need to charge extra for specific deodorization requests such as urine. If it costs you more money, it has to cost the customer as well. If you have a large, well thought of company in your neighborhood who is known for higher prices, it may be worthwhile to hire them for your own place and see what they do for the price they charge. Sometimes it is a cheap lesson.

 

[steve_64]

From day one I have been very profitable. Not sure what services you offer but I can't imagine not making money.

 

[Chris Howell]

Ok. Everybody already knew that I would mention carpet dyeing, but that's what we do, and my response is related to this thread.

A typical commercial job (we are 75% commercial) for us would be completed in 2 - 3 hours and would be in the $4,000 range. Our material cost would be less than $5.00

The most expensive piece of appointment that we would be using for this is a $40 shop vac.

 

[Cleanworks]

Ok. Everybody already knew that I would mention carpet dyeing, but that's what we do, and my response is related to this thread.

A typical commercial job (we are 75% commercial) for us would be completed in 2 - 3 hours and would be in the $4,000 range. Our material cost would be less than $5.00

The most expensive piece of appointment that we would be using for this is a $40 shop vac.

and you still don't think you are ripping people off?

 

[Chris Howell]

and you still don't think you are ripping people off?

Absolutely not, because it's saving them up to 75% of what would they would pay if they had to replace the carpet.

If our services weren't the most cost-effective option, everybody would replace their carpet. That's what drives our business.

 

[Cleanworks]

I don't know Chris, it's kind of like my $40,000 car breaks down and my mechanic says I can fix it for you for $20,000, saving you half the price of replacing the car. Then he replaces the fuse that was blown and I am on my way not knowing it only cost him $1.00 for the part and an hour of labor to find and fix the problem.

 

[Chris Howell]

and you still don't think you are ripping people off?

Oh, and it's not just me. See what Entrepreneur Magazine has to say about carpet dyeing.

https://www.entrepreneur.com/article/80684

Carpet Dyeing
For a fraction of the cost of replacing unsightly or stained carpeting, carpet-dyeing professionals provide hotels, community centers, nursing homes and other businesses an attractive alternative. So go ahead, lay the options at your clients' feet... and start making wall-to-wall profits.

 

[Chris Howell]

I don't know Chris, it's kind of like my $40,000 car breaks down and my mechanic says I can fix it for you for $20,000, saving you half the price of replacing the car. Then he replaces the fuse that was blown and I am on my way not knowing it only cost him $1.00 for the part and an hour of labor to find and fix the problem.

I think I would look for a different mechanic.

That's the advantage that you have with carpet dyeing. There's no competition. There are no other mechanics. . As long as you're solving the problem and are the most cost-effective option, you'll have the business.

Out of curiosity....what's the cost of the little piece of plastic that the plastic surgeon put in your nose andccharges $10,000 for?

 

[Cleanworks]

I think I would look for a different mechanic.

That's the advantage that you have with carpet dyeing. There's no competition. There are no other mechanics. . As long as you're solving the problem and are the most cost-effective option, you'll have the business.

Out of curiosity....what's the cost of the little piece of plastic that the plastic surgeon put in your nose andccharges $10,000 for?

That surgeon went to med school for probably 7 years then inturned with someone for some time before putting that little piece of plastic in your nose. That surgeon may have well over $200,000 invested in his training. He didn't just take a $2000 course and start calling himself a doctor. I think you provide a valuable service but your hourly rates seem absurd.

 

[Nate The Great]

That surgeon went to med school for probably 7 years then inturned with someone for some time before putting that little piece of plastic in your nose. That surgeon may have well over $200,000 invested in his training. He didn't just take a $2000 course and start calling himself a doctor. I think you provide a valuable service but your hourly rates seem absurd.

Haters gon hate........

@dealtimeman was here...

 

[hogjowl]

Remember ... this is the internet

 

[Chris Howell]

That surgeon went to med school for probably 7 years then inturned with someone for some time before putting that little piece of plastic in your nose. That surgeon may have well over $200,000 invested in his training. He didn't just take a $2000 course and start calling himself a doctor. I think you provide a valuable service but your hourly rates seem absurd.

Funny you should say that about the doctor. I'm quite happy that I earn more than many doctors yet didn't have to go to school for seven years or invest hundreds of thousands of dollars in medical school, only to graduate with so much debt that they can't afford to set up their own practice, purchase equipment, lease a space, etc. same thing for lawyers.

Very happy where I am

 

[steve_64]

How many people would go to his class if he bragged about making $50 for a football size repair. Once.

 

[Cleanworks]

You should start visiting doctors, tell them what fools they are and show them how they can earn some real money.

 

[hogjowl]

I'm just proud to be here.
When Taco isn't,

 

[Chris Howell]

You should start visiting doctors, tell them what fools they are and show them how they can earn some real money.

We've actually had some medical professionals take our training. They were sick and tired of working in the medical field we are insurance companies dictate what they can charge and weren't making a decent living at it. We've trained quite a few others who were brand-new to the carpet industry who wanted a complete career change.

 

[Cleanworks]

Each to his own, I not going to argue about, you obviously know what your service is worth. I'm just saying if I am a home owner or property mgr and hire you to do some color repair and you show up with a little tool kit and a cheap ass shop vac, spend an hour fixing some bleach spots and I get a bill for $900, I would probably think that a little high

 

[Jack Zipper Zerkie]

My skills are just cleaning to hard to learn much else my jobs dirt in dirt out easy. I used some old crayons on a bad rental that's all they would pay . life is great as u get older happy days all the time even before beer 30. jz.

 

[Desk Jockey]

I'm just proud to be here.
When Taco isn't,

Out practicing "wall climbing".

 

[Chris Howell]

Each to his own, I not going to argue about, you obviously know what your service is worth. I'm just saying if I am a home owner or property mgr and hire you to do some color repair and you show up with a little tool kit and a cheap ass shop vac, spend an hour fixing some bleach spots and I get a bill for $900, I would probably think that a little high

As long as the customer is saving money (and recognizes the value of the service compared to the cost of replacement) it's ok. They're always happy to avoid having to replace the carpet.

 

[hogjowl]

Out practicing "wall climbing".

You gonna be teaching seminars?

 

[Desk Jockey]

You willing to pay? I gots to tell ya I'm booked up 3-months in advance. But for you...I can squeeze you in...for cash!

 

[hogjowl]

I'm not aware of any walls being built around Dixie.

Yet

 

[Desk Jockey]

Just matter of time.

Can't have ya'll diluting the gene pool.

 

[hogjowl]

We like to keep it in the family

 

[Nate The Great]

 

[Desk Jockey]

LOL